MAT growth forecast hit by US tariffs

The global marine, aviation and transit (MAT) insurance industry, which was forecast to grow at a compound annual growth rate (CAGR) of 6.9% before the imposition of tariffs from the US, is now expected to grow at 6.4% between 2025 and 29 in terms of written premiums, according to data and analytics firm GlobalData. Recent news from the shipping sector seems to back up the firm’s forecast. German shipping giant Hapag-Lloyd has reported a 30% cancellation rate on bookings since the implementation of increased tariffs on US imports from China. The shipping market as a whole has announced an unprecedented number of blank sailings in response to the decline in volumes from China, despite the reported rush to build up stocks ahead of the tariff deadline. The shipping crunch started on 2 April when the US President announced “reciprocal” tariffs on imports. These tariffs include a base 10% plus additional tariffs ranging from 10% to 245%. Higher tariffs are typically imposed on specific products, but the blanket tariff rate of 10% on all countries will negatively impact the global economy. The countries that are mostly dependent on exports to the US will be severely impacted. However, there is a hold on this tariff for 90 days, except for China. According to GlobalData’s Insurance Database, the US accounted for around 50% of the global MAT insurance premiums in 2024. As per the revised forecast, high reciprocal tariffs will reduce US MAT insurance premiums by 1.4% in 2025, whereas the premiums of global MAT insurance will be impacted by 0.7%. The US is the largest importer in the world, with Mexico, China, Canada, Germany and Japan being the top five exporting countries in 2023, accounting for 53% of the total US imports. GlobalData expects the CAGR of MAT insurance premiums during 2025 to 2029 to reduce by 0.5 percentage points in Mexico, 0.6 in China, 0.5 in Canada, 0.5 in Germany, and 0.2 in Japan. Swarup Kumar Sahoo, senior insurance analyst at GlobalData, said: “The ‘Liberation Day’ tariff will disrupt the global MAT insurance as the premium growth will slow down in 2025 and subsequent years compared to the previous forecast. Although the global MAT business will experience a temporary surge during April-June 2025 due to the 90-day pause in the tariff, the growth will slow down once the tariff is in place. This will also impact the profitability of MAT insurers across the world.” Sahoo added: “The decline in MAT premiums growth rate will be due to both a decline in exports and the value of exported goods. In case the exporter absorbs the cost of the tariff, the cost of goods will go down, and this will reduce the sum insured and the respective premium amount. On the other hand, if the importer bears this, it will be passed on to the consumer, leading to a decline in demand.” To offset higher tariffs, importers have started either consolidating shipments or increasing the order size. The risk of theft and damage has increased due to the concentration of high-value goods at various points, said GlobalData. The imposition of revised tariffs across countries will also create complexities in customs clearance, leading to an increase in demurrage and detention fees, it added. “Insurers are expected to incur additional costs to rewrite such policies by considering the complexities and associated additional risks. Additionally, increased claims in marine cargo, aviation cargo, and transit will impact the profitability of insurers,” said the firm. Starting from 2 May, the US will eliminate the exemption of import tariffs on goods under $800 from China and Hong Kong. Due to this, DHL has suspended high-value business-to-consumer shipments to the US. Various airlines have suspended air cargo services for high-value goods. This will directly impact the air cargo insurance business. "The imposition of the higher tariff will disrupt the global MAT insurance, impacting premiums growth, while increasing the associated risks. Insurers need to be vigilant as higher claims would erode profitability. Furthermore, MAT insurers in the US will lose their global market share as they write half of the global MAT business,” concluded Sahoo. Back in February, the International Union of Marine Insurance (IUMI) executive held a meeting on the topic of free trade, and it was made clear that protectionist measures were not in the interests of the marine insurance community. In an inter-connected global economy, protectionism in the form of trade tariffs run counter to IUMI’s values of securing free trade and maintaining and growing the global economy, it said. IUMI secretary general Lars Lange said at the time: “More trade equates to more vessels and cargoes to insure. Protectionist measures tend to restrict trade and impact on exposures and insured values for marine underwriters. They will exert stress on supply chains, put pressure on certain trade routes and add to accumulations on vessels or in ports. This all adds to the overall risk profile. As an international association, we are concerned that the escalation of trade wars generally is an ineffective solution to what is often a deep-rooted problem.” Frédéric Denèfle, IUMI President, commented further in March specifically on the tariffs. “Together with other international professional organisations, IUMI has closely followed the many changes that have impacted international trade principles since the beginning of this year. Policy statements to implement trade barriers and tariffs against imported goods have caused deep concerns within the many countries that are highly involved in international trade and shipping,” he said. “Much diplomatic effort is now being expended to create the best deals to accommodate this evolution and avoid – as far as possible – a backward step in the international supply and demand of goods. These discussions are ongoing, and the outcome remains to be seen,” he added.

MAT growth forecast hit by US tariffs

Want to read this article?

Read Next

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Product recalls in Europe hit 11-year high in Q1: Sedgwick

BMS targets growth in Türkiye with Oria acquisition

New senior underwriter, professional risks at Tokio Marine HCC International

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Product recalls in Europe hit 11-year high in Q1: Sedgwick

BMS targets growth in Türkiye with Oria acquisition

New senior underwriter, professional risks at Tokio Marine HCC International

Keep yourself informed

Sign up for Commercial Risk’s newsletters

Want to read this article?

Read Next

BIBA hands out key awards at annual conference

BIBA wants time limit on key disclosure requirements

Product recalls in Europe hit 11-year high in Q1: Sedgwick

BMS targets growth in Türkiye with Oria acquisition

New senior underwriter, professional risks at Tokio Marine HCC International

Related Articles

Keep yourself informed

Sign up for Commercial Risk’s newsletters